European stocks rally for fifth day as defensives, miners climb
European shares extended gains for a fifth straight session on Tuesday, buoyed by defensive sectors and miners, although concerns over a potential recession limited further upside. The continent-wide STOXX 600 index inched up 0.2%, hitting a fresh 10-week high after recouping much of its June losses this week.
Miners jumped 3.2% to lead gains, lifted by a 5.5% surge in London-listed global miner BHP Group after stellar results. Telecoms and utilities - sectors seen as safer bets during economic uncertainty - also advanced.
"A lot of this (rally) is running on technicals and momentum, but the fundamentals haven't changed," said Seema Shah, chief strategist at Principal Global Investors. "The economic outlook for Europe is very negative. As we start to see recession come through and some of the hard economic data begins to deteriorate, that's when you could see European equities deteriorate."
German investor sentiment fell slightly in August on concerns the rising cost of living will hit private consumption, and suggesting Europe's largest economy is tipping into recession. "The ZEW survey fell again in August and is at a level consistent with the economy contracting," said Andrew Kenningham, chief Europe economist at Capital Economics.
"We now think a recession is unavoidable in the second half of this year as the impact of high energy prices on both households and industry takes effect." Separate data showed euro zone countries swung into a trade deficit in June from a surplus 12 months earlier because of soaring prices of imported gas and oil.
European stocks have held near recent peaks this week, despite weak data out of China and the United States as well as concerns around gas supply disruptions in Germany. Russia's Gazprom has cut gas flows to Germany through the Nord Stream 1 pipeline to 20% of capacity, driving fears of a severe shortage in the winter season.
Among other stocks, Delivery Hero climbed 5.4% after the German online takeaway food company forecast a 7% growth on the quarter in its third-quarter gross merchandise value (GMV). Sonova plunged 16% after the hearing aid maker lowered its full-year earnings forecast, citing a slower-than-expected development in some important markets and higher component and freight costs.
Pandora fell 6.1% after the Danish jewellery maker reported disappointing second-quarter sales in the U.S. market.
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